Thu, Jan 23, 2003
GAO Report Paints Bleak Short-Term Picture
The airline industry, facing unprecedented
financial losses as a result of the economic downturn and the
terrorist attacks, has taken steps to minimize losses, including
reducing or eliminating service to some small communities. In March
2002, GAO reported that small communities had almost 20 percent
fewer departures in October 2001, as compared to October 2000.
What the GAO Found:
GAO was asked to follow up on that work by examining the
challenges small communities face in attracting and keeping the air
service they desire and what steps they have taken to overcome
these challenges.
Small communities face a range of fundamental
economic challenges in obtaining and retaining commercial passenger
air service. The smallest of these communities typically lack the
population base and level of economic activity that would generate
sufficient passenger demand to make them profitable to air
carriers. While larger communities in this group may have less
difficulty in sustaining a base level of service, they may not be
able to attract additional carriers to provide greater choice and
lower fares. Smaller communities located near larger airports may
also face reduced demand because passengers choose to use the
larger airport with lower fares or more choices for flights. These
communities also have difficulty because the airline industry is in
turmoil, making less profitable operations increasingly
vulnerable.
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